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Stop, Look & Listen: Railroad Retirement Benefits Q&A

Answers are provided by Robert S. Kaufman

Comparison Between Tier 1 & Tier 2

(Posted June 13, 1999)

Question 22: Can you explain the basic difference between Tier 1 and Tier 2?

Answer: Tier 1 is like a Social Security benefit. It is based on your earnings from both the Railroad Retirement and the Social Security programs. The full benefit amount is reduced by any seperate Social Security benefit that you receive.

Tier 2 is calculated like a private pension -- it is based only on rail earnings. It is based on the total years of rail service and the average monthly earnings credited under the Railroad Retirement program.

Tier 1 is increased annually by the same percentage as Social Security, veterans' benefits, and federal civil service pensions are increased. Tier 2, on the other hand is only increased by approximately one-third of the cost-of-living increase.

Please see my answers to Q&As 12 16 for additional discussion.

Important notice:

Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.

The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.

Copyright 1997-2017 Robert S. Kaufman
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